Ups and downs

Compared with the previous two years, 2022 was less of a roller coaster for the housing market in Virginia, but it still presented challenges for many would-be first-time homebuyers.

As inflation rates grew, peaking at a 40-year high of 9.1% in June 2022, the Federal Reserve increased interest rates rapidly. Inflation fell to 6.5% in December 2022, but the higher rates put the brakes on the housing market in Virginia with an abrupt screech.

Over the course of 2022, 123,000 homes sold statewide, about 20% less than in 2021 but closer to pre-pandemic activity, according to Virginia Realtors. The sharpest declines were seen in Northern and Central Virginia. Bidding wars were less common last year than during the height of the pandemic, but it still wasn’t a great market for buyers, as the state’s median sales price jumped about $25,000 to $375,000 in December 2022, compared with December 2021.

However, in February, mortgage rates started to decline, prompting renewed demand. According to a Wall Street Journal report, the average 30-year home loan rate has come down by nearly a full percentage point from a 20-year high above 7% in November 2022 — although that’s still double the 3% rates from November 2021. 

On the commercial side, many large-scale projects are now in the works across the state. In Richmond, the ball is rolling on the $2.44 billion Diamond District mixed-use development centered around a new baseball stadium for the Richmond Flying Squirrels, set to be completed in time for the 2025 baseball season.

At the end of 2022, the Richmond Economic Development Authority and the Greater Richmond Convention Center Authority received five proposals from developers to redevelop the City Center Innovation District, a 9.4-acre downtown area that includes the closed Richmond Coliseum, which the city wants demolished. A 10-person evaluation panel is scheduled to narrow the group of five during the first quarter of this year.

In Hampton Roads, two of famed entertainer and Virginia Beach native Pharrell Williams’ larger projects made progress in 2022: the $1.1 billion redevelopment of Military Circle Mall in Norfolk and the $350 million Atlantic Park project in Virginia Beach.

Negotiations started last year, but as of late January, Williams’ Wellness Circle team had not yet officially signed documents to redevelop Military Circle Mall, which would include 1,100 residential units, a 200-room hotel and a 16,000-seat arena. In November 2022, the music superstar prodded Norfolk leaders to move forward with the project, saying “The ball’s in their court.”

Meanwhile, the Oceanfront-based Atlantic Park, Williams’ surf park project with Virginia Beach-based Venture Realty Group, secured pending financing in January and is getting closer to groundbreaking, with completion set for summer 2024. The first phase includes 120,000 square feet of retail, 310,000 square feet of residential and 15,000 square feet of office space.

Northern Virginia is seeing massive development along the Silver Line’s Loudoun County extension, which opened in November 2022 after an eight-year delay. Reston Town Center, which has 5.1 million square feet of office space, is set to add 700,000 to 800,000 square feet more in the next few years, part of a $3 billion investment by Boston Properties Inc., and developer Comstock Inc. is busy building 7 million square feet of offices and residential space at Reston Station. The company has plans for 2.5 million square feet of multiuse space at Loudoun Station in Ashburn.

In Danville, the long-awaited White Mill project broke ground in early 2023. The $100 million public-private redevelopment of the 550,000-square-foot former textile mill, now known as Dan River Falls, is a joint venture between the city’s industrial development authority and The Alexander Co. It will have 147,000 square feet of commercial space and 150 apartments geared toward employees of the forthcoming Caesars Virginia casino.  

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